RCom-Aircel merger creates third-biggest operator

The proposed RCom-Aircel merger would create the third-biggest mobile operator after Vodafone and Airtel in the country with a subscriber base of 195 million. It would control 19.3 per cent of total spectrum, second only to Airtel. Its combined debt will be Rs 28,000 crore, assets worth Rs 65,000 crore and net worth Rs 35,000 crore. Its combined revenue is estimated at Rs 27,000 crore and EBITDA of Rs 6,800 crore.

The proposed merger may be executed in phases over the next six months. Following the merger, RCom and Maxis will pump in additional equity into the company to strengthen the balance sheet, fund growth, and enhance financial flexibility. Both parties are already in talks with leading international investors in this regard.

The creation of the new entity will first involve RCom demerging its existing cellular business, which has around 100 million subscribers. Other businesses, including tower assets and fixed-line enterprise units, may continue to be held by RCom. The wireless unit will then be merged with Aircel.

RCom and Aircel’s Malaysia-based promoters Maxis Communications Berhad will hold 50 per cent each in the new venture, with equal representation on the board. RCom had earlier merged with Sistema JSFC’s Indian operations — MTS — under which the Russian company already holds a 10 per cent stake in RCom.